FanDuel Parent Flutter Unveils Illinois Surcharge
Posted on: June 10, 2025, 09:33h.
Last updated on: June 10, 2025, 10:42h.
- Starting in September, FanDuel will apply 50 cent surcharge per bet made in Illinois
- Company is first to respond to state’s recent tax increase, the second in a year
- DraftKings likely to follow suit, says analyst
Flutter Entertainment (NYSE: FLUT), the parent company of FanDuel, said Tuesday it will charge Illinois bettors 50 cents per wager placed, making the operator the first to respond to the state’s latest sports wagering tax increase. That policy goes into effect on September 1.
Earlier this month, Illinois announced a new sports betting tax under which operators will be subject to a levy of 25 cents per wager on the first 20 million bets they book, with that figure doubling to 50 cents once the 20 million threshold is exceeded. Like the progressive tax scheme instituted by the state in 2024, the latest Illinois tax increase disproportionately affects FanDuel and DraftKings (NASDAQ: DKNG).
For the 12 months spanning April 24, 2024, to March 25, 2025, FanDuel and DraftKings — the two largest US internet sportsbook operators — booked 164 million and 146 million bets, respectively in the Land of Lincoln. Analysts have said the new Illinois tax plan could hit both operators’ bottom lines to the tune of tens of millions of dollars.
This decision reflects the significant increase in the cost of operating in Illinois driven by the new Illinois Transaction Fee,” according to a Flutter statement. “The introduction of this fee by the state follows a substantial increase in the betting tax rate in Illinois in 2024. Following the 2024 increase, extensive efforts were made by FanDuel to absorb the cost fully without impacting customers.”
Flutter said that if Illinois scraps the new tax plan, it will follow suit and end its 50 cents per bet surcharge. In the statement, CEO Peter Jackson, who’s frequently discussed the need for states to be pragmatic regarding sports betting tax increases, said the surcharge will have the most deleterious effects on smaller recreational bettors. He added that Illinois is punishing the operators that have invested the most in the state.
Illinois Likely Invited Flutter Response
Revenue-hungry Illinois, which scores poorly in state rankings for fiscal stability, may have invited the response from Flutter by pursuing sports betting tax raises in consecutive years — both of which target the biggest operators doing business there.
“We believe the back-to-back nature of the IL tax hikes, oppressive all-in effective rate, and volume-based structure (which disproportionately penalizes FLUT’s more responsible gaming-friendly, recreational-heavy sportsbook) ultimately necessitated more concerted efforts to illustrate derivative impact to user-paid ‘prices’ and regulated-to-unregulated channelization,” wrote Stifel analyst Jeffrey Stantial in a report to clients on Tuesday.
Higher taxes on gross gaming revenue (GGR) are easier for companies to digest because there are more avenues for mitigation, including reduced marketing and promotional spending. Per-wager levies are a different animal and, as Flutter is showing, can evoke responses that aren’t hospitable to customers.
Broadly speaking, the industry has shown it’s not in favor of surcharges. Last year, DraftKings attempted such a scheme in Illinois, New York, Pennsylvania, and Vermont, but scrapped that plan when none of its competitors, including FanDuel, announced similar plans.
Currently, the best news out of Illinois as it pertains to sports betting taxes is the belief on Wall Street that other states are unlikely to mimic that state’s per-wager levy.
Expect DraftKings to Follow Flutter
Like FanDuel, DraftKings is staring at its own earnings before interest, taxes, depreciation, and amortization (EBITDA) hit in Illinois, indicating it could be just a matter of time before that company follows its rival in deploying a surcharge there.
In our view, FLUT’s announcement suggests DKNG is likely to follow suit given its history of employing a surcharge on the tax increase in 2024,” wrote Jefferies analyst David Katz. “We estimate that without mitigation, the tax would amount to a ~$70M EBITDA headwind for DKNG, which the company would seek to mitigate.”
Katz added that when accounting for a 50-cent per-bet surcharge and the state’s levy of 25 cents per wager on the first 20 million bets booked by operators, FanDuel and DraftKings could each generate another $5 million in revenue in the state, nearly all of which would flow to EBITDA because there are no new expenses tied to implementing the surcharge.
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